340

ESSAY XII.

ON THE EMPLOYMENT OF CAPITAL IN

MANUFACTURES.

THE greater part of the conveniences and luxuries, and many of the necessaries, which mankind possess, are the result of improvements in manufacturing industry. Manufacturers are, on the one hand, stimulated to increase their supplies when encouragement is offered by the purchasers; or, on the contrary, the manufacturers reduce the amount of their productions when the price does not afford adequate remuneration. But the demand for conveniences and luxuries, as is before shewn, can exist only in proportion to the surplus revenue which the intended consumers possess, after providing the necessaries they require. Whether the market be abroad or at home, the effectual demand can alone be experienced according to the ability to buy manufactures which remains, after the expected purchasers are provided with necessaries.

However much the manufacturers may depend upon the existence of a surplus produce of the soil, the agriculturists in their turn become equally de

pendent upon the prosperity of manufactures. Unless these were carried on, there could be no market for the corn produced beyond the wants of the labourers employed in cultivation, nor would there exist any demand for the produce which is now provided as materials of manufacture. Wool, flax, cotton, and almost every other kind of raw produce, which are now readily convertible by exchanges into immediate supplies of necessaries, conveniences, and luxuries, could possess little or no value without the aid of manufacturing industry. Were there no manufactures, agriculturists would find no inducement to provide more of any kind of raw produce than what was wanted for their own immediate consumption.

In manufacturing establishments of magnitude, most of the benefits resulting from the employment of capital are sufficiently obvious. Improvements in the application of labour are usually far more conspicuous there than in agriculture. Almost all the advantages proceeding from the division of labour, from the use of machinery, and from the employment of large capital in manufactures, can at once be presented to view, and the result exhibited in an increase of production.

From the more extended use of machinery, or the improvements in the implements of labour used in manufacture, there will usually follow the ability to sell its produce at a cheaper rate, yet with the

same and even a greater profit than before. Being afforded a lower price, finished work is placed within the reach of more purchasers, and the demand increases in consequence. Since the important improvements of machinery, and its more general application in the fabric of cotton goods, their common use and consumption are greatly extended, and many additional comforts or conveniences are afforded to the community. It may indeed be supposed, that the manufactures of linens and of woollens have in some degree been supplanted; yet as the discovery and the use of more improved machinery in one fabric leads to its introduction in others, the woollen and linen manufactures are likewise provided for much less expense, and are sold at much lower prices than formerly : the total quantity consumed, far from suffering any diminution, has therefore been greatly increased. The whole society is in consequence enabled to augment very much the sum of its enjoyments.

According as the use of machinery has been more and more extended, so has the abundance of coal at a moderate price become of greater importance in facilitating the supply of manufactures, and on the most advantageous terms. In consequence of an abundance of fuel being obtainable at a low price, the expenses of employing machinery are reduced: accordingly, it is in those particular districts of Great Britain where coal continues remarkably cheap, that the most extensive

Without the ad

manufactures are established. vantages resulting from the abundance and low price of coal, it is probable that neither the founderies at Carron, nor the greater part of the manufactures at Newcastle, would have had an existence. By means of machinery worked by the power of steam, many branches of manufacture can be conducted not only at a greatly reduced rate of expense, but also with accelerated expedition, and the work likewise is for the most part completed in the most approved manner. The capital employed in machinery, as well the part which assists in providing coal as what more directly promotes the increase of manufactures, is consequently invested to the utmost advantage. A manufacturer, who provides his goods on the cheapest terms need not fear competition; whilst he can furnish, with the greatest celerity, the supplies that are wanted, he will the soonest be able to avail himself of the market prices which prompted him to undertake his operations. In consequence too of the most approved completion of the work, it will be preferred by purchasers.

When many large capitals are employed in different branches of the same manufacture which is established in the neighbourhood, various advantages accrue to the capitalists, and the goods can usually be afforded at a lower price than in other countries differently circumstanced. The causes of

this may lead to some detail, but are not uninteresting.

First, the raw materials can generally be purchased at lower prices, where the demand is constant and almost uniform, than where it is only occasional. The quantity of cotton wool for example, which is imported into Great Britain, exceeds considerably the quantity wrought up into a manufactured state; and there is annually re-exported to other European countries from fifty to eighty thousand bales. It cannot well be doubted, that the medium price in this country is lower than in the other markets to which a part of the cotton wool is usually re-exported for ultimate consumption, because, if the fact were otherwise, no person would incur the expense and risk of exportation. Were there no effectual demand from any other country adequate to defray this expense and risk, the excess of the material, supplied from the places of growth to Great Britain, would be forced for sale upon the market here, and the price would be further reduced. It is generally found to be more. advantageous for the capitalists, who are extensively engaged in the importation of cotton wool, to bring it in the greatest abundance to Great Britain, where they can always effect a sale, and realize the proceeds for further employment; rather than to con

* In the present year the quantity re-exported exceeds the largest

of these estimates.